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Nasdaq in whisper rally
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August 29, 2000: 5:20 p.m. ET
Tech stocks rise again in last days of summer, but Dow takes a break
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The Nasdaq composite index inched higher Tuesday, posting its eleventh gain in 13 sessions, as investors tried to get ahead of a traditional year-end rally among technology stocks.
Oracle, Cisco Systems and Dell Computer all rose, lifting the Nasdaq further into positive territory for 2000. The slow, steady gains are part of a quiet trend: The Nasdaq has advanced incrementally nearly every day in August after tumbling this spring.
The Dow Jones industrial average has also had a strong August, rising nearly 7 percent this month. But the index edged lower Tuesday; a surge in J.P. Morgan could not offset declines in drug stocks, which rose strongly this summer.
 Andrew Barrett, technology analyst at Salomon Smith Barney, attributes the Nasdaq's rise to investors wanting to own technology stocks ahead of the fourth quarter -- a historically solid time for those companies.
"It's called the Santa Claus effect," Barrett said. "The holiday period is traditionally a strong cycle."
That was clearly the case last year. At this time in 1999, the Nasdaq was up 25 percent on the year, only to finish 86 percent higher when 1999 ended.
Also boosting the market, investors these days increasingly believe the Federal Reserve, which held borrowing costs steady last week, won't raise interest rates anytime soon. Illustrating that confidence, a surprise surge in July new home sales Tuesday failed to rattle the market.
The Nasdaq rose 11.58 points to 4,082.17, advancing further past the 4,069.31 mark at which it began the year. The Dow slid 37.74 points to 11,215.10. The S&P 500 shed 4.25 to 1,509.84, but still remained higher for the year.
 Market breadth was mixed. Declining issues on the New York Stock Exchange beat advancing ones, 1,504 to 1,296, on volume of more than 786 million shares. But Nasdaq winners edged out losers, 2,065 to 1,875, on trading volume of more than 1.4 billion shares.
In other markets, Treasury securities fell for a second straight day. The dollar rose against the euro, which tumbled near a lifetime low. The U.S. currency edged lower versus the yen.
Tech stocks rise
The day's activity comes amid a good period in the markets. Stocks have gained this summer -- putting the Nasdaq and the S&P 500 positive for 2000. The gains come amid the belief that borrowing costs, which rose for much of this year, have peaked
David Alger, mutual fund manager for Fred Alger Management, told CNNfn's Market Call that the Nasdaq and may test the record levels set in March. (412K WAV) (412K AIFF)
Investors have indeed gained confidence in large, fast-growing technology firms. Among Tuesday's winners, Oracle (ORCL: Research, Estimates) rose $1.00 to $87.75, Cisco Systems (CSCO: Research, Estimates) gained 50 cents to $66.56, and Dell (DELL: Research, Estimates) gained $1.06 to $40.56.
 In the Dow's biggest gainer, J.P. Morgan (JPM: Research, Estimates) surged $3.88 to $149.00. Morgan, a perennial target of takeover rumors, surged with Donaldson Lufkin & Jenrette (DLJ: Research, Estimates). DLJ's shares jumped $16.19 to $82.00 as rumors swirled that the company was in active merger discussions with Credit Suisse First Boston.
Financials have acted well recently, a sign the many analysts take as a positive.
"The strength in these stocks can only happen when you have healthy markets," Joseph McAlinden, chief investment officer at Morgan Stanley Dean Witter Funds, told CNN's Street Sweep.
Also supporting the Dow, AT&T (T: Research, Estimates) advanced $1.56 to $31.81. The gain came despite the company's warning late Monday that it could see third-quarter profit fall five cents a share below estimates. But for AT&T -- whose stock is down about 50 percent from its 52-week high -- the day's action could mean a turning point. Some analysts say that when a stock no longer falls on bad news, its shares may have bottomed.
Drug stocks, among the year's best performing sectors, fell Tuesday. Johnson & Johnson (JNJ: Research, Estimates) shed $1.38 to $99.38. Its anti-clotting drug ReoPro showed no significant benefit in a Phase 3 clinical trial, according to a study. Merck (MRK: Research, Estimates) went along for the ride, tumbling 97 cents to $71.50.
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In deals crossing the wires, Beringer Wine Estates (BERW: Research, Estimates) surged $10.25 to $55.31. Australian brewer Foster's Brewing Group Ltd. said Monday it would buy the Napa Valley winery for roughly $1.2 billion in cash.
Home sales surge
The strength of the housing market in July surprised many on Wall Street. Sales of new homes surged 14.7 percent to an annual rate of 944,000 in July, according to the Commerce Department -- beating expectations of analysts polled by Briefing.com, who forecast a rise to an 835,000 rate.
"This number comes completely out of the blue -- there has been nothing in the anecdotal or survey evidence even hinting at such a massive rebound," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Still, Shepherdson said the figures likely will fall back in August.
 Separately, the Conference Board's measure of consumer confidence slipped in August to 141.1, below the revised July figure of 143.0 but nearly matching the Briefing.com forecast of 141.0.
The numbers had no apparent market effect. Instead, Wall Street is more focused on Friday, when the government releases August employment data. The numbers could gauge whether the nation's tight labor market, with unemployment hovering near a 30-year low, is loosening as the economy slows. The Federal Reserve left interest rates last week after tightening credit six times since June 1999. 
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